Measure Would Address Foreclosure Crisis in New Jersey, Provide Credit to Municipalities Which Transition Foreclosed Property to Affordable Housing
TRENTON – A bill sponsored by Senators Raymond J. Lesniak and Barbara Buono which would establish a comprehensive program to transition foreclosed property into affordable housing was approved by the Senate Budget and Appropriations Committee today by a vote of 7-2, with two abstentions.
“This bill would give local officials and the State a valuable tool to help clean up blighted neighborhoods and convert abandoned, foreclosed homes into affordable and market-rate homes,” said Senator Lesniak, D-Union. “We’re currently experiencing a nearly-unprecedented foreclosure crisis in New Jersey, with home values far less than they were a few years ago, during the housing boom of the last decade. This bill creates a mechanism to reclaim and renovate foreclosed properties in order to create affordable homes and market-rate housing for New Jersey families to live and grow.”
“More than 100,000 homes in New Jersey are in the foreclosure process, according to estimates published in the Star-Ledger,” said Senator Buono, D-Middlesex. “This program opens a five-year window for the state to step in and jump start the resolution of our foreclosure crisis.”
The bill, S-1566, would establish a central agency under the New Jersey Housing and Mortgage Finance Agency (HMFA) to use funds from the State Affordable Housing Trust Fund to purchase and deed-restrict foreclosed properties to be used as affordable housing. The bill would also create incentives for municipalities to transition foreclosed properties to affordable housing, giving them a 2-to-1 match against their affordable housing obligation for affordable units created from foreclosed properties using funds from municipal affordable housing trusts. The bill sponsors said the bill could result in over 10,000 new affordable units and over 10,000 less unoccupied, boarded-up properties.
Senators Lesniak and Buono said that the initiative would be paid for by tapping into unused funds held in the State Affordable Housing Trust Fund and in municipal affordable housing trust funds, as well as excess funds received from the Realty Transfer Fee, federal funds reserved for affordable housing production and neighborhood revitalization, and the HMFA’s bonding capacity.
The bill is supported by the New Jersey Bankers Association, the New Jersey Realtors Association, the New Jersey Builders Association, the New Jersey League of Municipalities and the Housing and Community Development Network of New Jersey.
“One foreclosed property can have a negative impact on the value of the rest of the homes on the block,” said Senator Buono. “This isn’t just about foreclosed properties or affordable homes – it’s about communities in economic crisis, and it affects all New Jersey residents.”
“There are tens of thousands of vacant, foreclosed properties currently in the Garden State, with more being added each and every day,” said Senator Lesniak. “The foreclosure crisis exists in every corner of our home state – not just in poor, urban communities. S-1566 would help combat the ever-growing foreclosure crisis by creating incentives for municipalities to clean up abandoned, dilapidated properties, and by engaging the State to turn around foreclosed homes into productive, affordable homes. It doesn’t get any better than that.”
The bill now heads to the full Senate for review.